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Possible Fairview Health takeover raises alarms

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University of Minnesota Medical Center Fairview
Attorney General Lori Swanson is looking into the potential takeover of Fairview Health Services by South Dakota-based Sanford Health.
Photo Courtesy of Fairview Health Services, file

University of Minnesota officials are raising concerns over a possible merger between Fairview Health Services and South Dakota-based Sanford Health.

Sanford, which has facilities in eight states, has expanded into parts of Minnesota in recent years. Fairview controls the University of Minnesota's hospital. 

"The university educates and trains about 70 percent of the medical doctors in Minnesota, We are the only school in Minnesota that has schools of dentistry and pharmacy," said Mark Rotenberg general counsel for the university. In a conference call with reporters, he said officials are concerned about how a merger could impact the school's academic and research missions.  

"How would the acquisition by Sanford of our partner here -- that we have had for many years -- how would it affect the people of Minnesota," Rotenberg said. "And how would it affect the University of Minnesota, and our teaching and our research and our public function as a state institution?"

State Attorney General Lori Swanson has also raised concerns and is planning at least one public hearing next month. She's particularly concerned about the possible takeover of Fairview's University of Minnesota research and teaching hospital. Swanson said Fairview needs to repay the generosity of Minnesotans to its organization.

"People have donated land for them to build hospitals; they have donated property and money and they have been allowed to have these various tax exemptions that are very lucrative for any organization," Swanson said. "Part of the giving back for that special tax treatment is for them to honor the commitments of the people of Minnesota."

Fairview generates more than $2 billion in revenue and employs 22,000 people in Minnesota. Swanson says Fairview controls about 20 percent of the state's health care market and has a net worth of roughly $1.2 billion. The company was founded in Minnesota a century ago. 

A statement from Fairview Health Services said the company is exploring its options and talks with Sanford are in the very early stages No agreements or formal commitments have been made. "Nothing will move forward unless we and our partners at the University of Minnesota believe there is merit to a merger," the statement reads, in part.

Sioux Falls-based Sanford health runs 35 hospitals and more than 140 clinics in eight states, including Iowa and North and South Dakota. The company has expanded into parts of Minnesota in recent years. 

In a statement, Sanford President and CEO Kelby Krabbenhoft said media descriptions of a takeover or acquisition were "unfortunate." 

"Sanford and Fairview have only agreed to discussions and exploratory review of each organization," Krabbenhoft said.

The statement goes on to say these efforts could complement the University of Minnesota's mission.

Rotenberg said he is looking forward to learning how exactly the university could fit into a Sanford-Fairview partnership.

"Another critical issue is what kind of support would this new merged hospital organization be prepared to provide for a leading academic medical center like the University of Minnesota," he said.

Swanson's investigation into the negotiations between Fairview and Sanford is ongoing. Public hearings are planned beginning April 7 at the State Capitol.